Yi Whan-woo is a Korea Times journalist primarily covering finance. He writes in-depth articles on macroeconomy and financial markets and previously covered sports, politics, diplomacy and inter-Korean affairs, among others. Feel free to contact him at yistory@koreatimes.co.kr.
Dormant credit cards nearly double over fierce competition to woo customers
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By Yi Whan-woo
The number of credit cards that go unused after being issued has nearly doubled over the past five years, driven by fierce competition among card issuers to attract a larger and more diverse customer base through partnerships with top-tier business brands.
According to the Credit Finance Association on Monday, the number of dormant credit cards — defined as those unused for over a year and temporarily suspended — reached 20.01 million across 19 financial firms in the first half of the year.
This represents a near-twofold increase from 10.68 million in 2020, largely attributed to the surge in co-branded cards, or private label credit cards (PLCCs), which are designed to offer tailored benefits for purchases at specific partner companies with strong customer loyalty.
Prominent partner brands include e-commerce giant Coupang, leading beauty retailer CJ Olive Young and coffeehouse chain Starbucks, among others.
PLCCs typically feature the logo or design of the partner brand and provide deferred payment options, favorable payment terms, generous reward points and discounts on future purchases.
“From the customer’s perspective, such benefits serve as a strong incentive to use the card,” said one market observer. “Ironically, however, customers often end up neglecting these cards, as they tend to sign up for multiple PLCCs.”
Another expert pointed out that owning multiple rarely used credit cards imposes a significant burden on both consumers and card issuers.
“For consumers, having too many unmanaged cards raises the risk of paying unnecessary annual fees,” he said. “Leaving credit card information registered on various online platforms or payment services also increases the risk of personal data breaches. On top of that, managing multiple transaction histories can complicate financial tracking and lead to confusion over credit limits.”
From the issuer’s standpoint, dormant cards are equally problematic.
A third market observer noted that inactive cards lead to lower transaction fee revenues and reduced customer loyalty while increasing administrative costs — all of which diminish operational efficiency.
To address the growing issue of dormant credit cards, experts stressed that issuers should not hinder customers who wish to cancel their cards.
“Card companies often try to retain customers by offering perks when cancellation is requested,” an observer noted. “While this may delay cancellations in the short term, many customers simply take the benefits and then stop using the card, turning it into yet another dormant account.”